National Council of Applied Economic Research
Surveys show that the govt’s support schemes do not reach such households. Direct cash transfers and universal PDS will help
Opinion: Sumit Mazumdar Santanu Pramanik and Sonalde Desai
As details of the stimulus package recently announced by Nirmala Sitharaman begin to emerge it appears that there is a serious mismatch between the areas and groups most affected by the Covid-related lockdown and the shape of the subsidies. The people who are most affected by the threats of the disease and income reduction — the urban informal-sector workers — are the least likely to receive the benefits. While movements are being relaxed it is unlikely that red-zone districts particularly those in large metros like Delhi and Mumbai will quickly return to normal.
The uncertain curves of the coronavirus epidemic have translated into even greater uncertainties for those without secure earnings. Most of the nation’s workforce earns its livelihood in a highly diverse informal sector — the underbelly of the economy where a day off essentially means a day without any earnings. This is the population that most needs support in the immediate period creating precarity.
Deepening of insecurities
Data collected by the NCAER National Data Innovation Centre through a scientifically-designed rapid telephone survey of 1756 households conducted between April 3-6 and another survey of 1885 households conducted between April 23-26 help identify the nature of these vulnerabilities. Samples included both urban and rural residents from the Delhi NCR region in three districts of Delhi four districts of Haryana two districts of Rajasthan and three districts of Uttar Pradesh. Results from the Delhi NCR Coronavirus Telephone Surveys (DCVTS) show that the impacts of the lockdown are most intense among families relying on daily wages or those without secured salaried jobs.
The DCVTS households contain a mix of salaried workers (36 per cent in both permanent and casual employment contracts) cultivators (22 per cent) petty business owners (20 per cent) and casual-wage workers (18 per cent). In late April a vast majority (82 per cent) of the households reported some level of reduction in income or wages in the two weeks before the survey with the reduction being the highest for casual-wage workers and small businesses. More than two-thirds (72 per cent) of the casual workers reported that their income and wages had suffered “very much” in this period much higher than regular salaried workers (41 per cent) or farmers (34 per cent).
While most of the respondents supported the lockdown most of the casual workers (63 per cent) were keen to return immediately to seek work once the lockdown restrictions were lifted regardless of the likelihood of contracting disease. This desperation and insecurity aren’t limited to the casual wage-earning workforce but are stark even among those with salaried jobs. Over a third (38 per cent) of the salaried workers — mostly those in the ‘gig economy’ spanning across insecure service sector jobs in e-commerce hotels/restaurants etc — either did not receive any salary received a partial salary or lost their job during the lockdown.
Inadequate relief measures
In the face of dwindling incomes and uncertain livelihoods public relief measures are critical lifelines. Data on relief measures tell a story of a glass half full. The DCVTS-2 findings suggest that 52 per cent of the families in rural areas of the NCR and 42 per cent of those in urban areas received extra rations in the form of grains and pulses. Almost two out of every three households that suffered a major dent in incomes during the lockdown received some form of these additional rations. About 29 per cent households received additional cash transfers from the government during the lockdown.
However nearly half of the poor households in the bottom one-third of the ‘asset ownership index’ did not receive any cash assistance (asset ownership index is similar to the NFHS wealth index based on ownership of vehicles cooking gas toilet indoor water etc). The amount of cash assistance was also modest. In the month before the second survey 50 per cent of the households receiving cash (median) received ₹1000 or less in villages and ₹500 or less in urban areas. Only 19 per cent households received both additional rations and additional cash benefits with large differences between rural (25 per cent) and urban households (12 per cent). More than one-third of the households that had their incomes significantly reduced due to the lockdown needed rations but didn’t receive any. Among urban poor households 46 per cent did not receive additional rations in spite of their need for it. For households having salaried workers who did not receive their full salary for the month of March 38 per cent needed additional rations but did not receive it.
As containment measures focus on infection levels it is clear that metro cities like Delhi almost entirely classified as “red zone” may be the slowest to return to normalcy. Rural areas are a notch better due to combination of less stringent restrictions existing government mechanisms for direct transfer of cash to beneficiaries of programmes such as MGNREGA the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) better coverage of PDS and financial inclusion schemes such as the Jan Dhan Yojana. Thus urban-focussed safety nets may need to be enhanced.
Policy responses
Majority of the DCVTS-2 respondents — especially casual-wage workers and salaried workers who did not receive their full salary — are waiting for the lockdown restrictions to be relaxed. But the switchover to the pre-Covid state is unlikely to be immediate. Given the likelihood of a phased responsive plan for the post-lockdown period targeting relief measures appropriately will be important.
The most immediate and direct source of support required — as the DCVTS-2 findings highlight — is to ensure expanded and effective coverage of relief measures for the most hard-hit families. A major component of this should be cash support amounting to at least 20 days of the usual minimum wage. This can be implemented in districts defined as red zones while movement restrictions are in place. Additionally the PDS needs to be expanded to cover more individuals and items. The recent package includes provision of rations to migrant workers for two months with the national portability of ration cards to be implemented by August. But this does not meet the urgent need of the hour. The time may have come for a simple universal PDS using Aadhaar cards which can be implemented immediately. Expanding PDS to include pulses edible oil dried milk powder and biscuits will increase food security.
In urban areas once the lockdown conditions are relaxed and economic activities resume there will be further need for economic stimuli apart from targeted interventions. These include urban employment guarantee programmes for casual-wage workers whose usual sources of work may not return immediately. Small businesses and home-based enterprises would allow for social distancing while providing livelihoods. Hence they should be extended support under an employment guarantee programme where they can claim some part of the wages paid to their employees.
This would help kickstart the economy. The packages being developed for MSMEs should prioritise micro enterprises where most of the workers are employed. These combination of measures during and following the lockdown would be critical to avoid insecurities.
Sumit Mazumdar is a Research Fellow at the Centre for Health Economics University of York. Santanu Pramanik and Sonalde Desai are at the NCAER National Data Innovation Centre. Views are personal.